Iacocca drives again

Commentary: Top pitchman returns for Chrysler

By

MarshallLoeb

NEW YORK (MarketWatch) -- At age 80, Lido "Lee" Iacocca is having the time of his life.

The man who turned around the failing Chrysler Motor Co. when he was its CEO in the 1980s and 1990s --and became one of the most recognized Americans from his famously successful TV commercials -- is being brought back to appear in a fresh series of commercials as part of a $75 million ad campaign heralding a new employee pricing promotion on most Chrysler, Dodge and Jeep vehicles. He loves cars, he loves the spotlight, he loves to pontificate on the auto market, he loves raising money for charity, he loves to do well by doing good -- and the new Chrysler gig affords him all of that and more.

In an interview with Iacocca today, I asked him what he's now telling all those folks out there in TV land.

"Well," he responded, "I'm telling them that the guy with the best cars wins. Chrysler has great cars now, product-wise. Now, all they need is the deal. And their new deal of giving the employee discount plus up to $3,500 off the sticker price -- even more than that -- will improve sales. And they called on an old guy like me to come back and see if I can resonate with the Baby Boomers."

I asked if he thought the auto industry is overdoing cash rebates these days.

"My God," he exploded, "are they ever overdoing it!

"When I first got to Chrysler, Joe Garagiola [a professional baseball catcher] was pitching $300 cash back and $500 on a custom vehicle. That was 1978.

"Now I look and they say, 'How would you like $5,000 off? How would you like $7,000 off?'"

As evidence, he noted that General Motors
GM, -0.20%
has been particularly forceful with rebates, and that its sales improved in June as a result.

So the other guys, Ford
F, +2.21%
and Chrysler, just couldn't stand by. Chrysler not only joined the parade, but one-upped it by not only offering the employee's price but $3,500 on top of that.

The size of the total rebate would depend on the vehicle, but, said Iacocca, "one of the big SUVs could be $5-6,000 for sure."

I noted that Chrysler Group's U.S. sales have risen for seven consecutive quarters and asked how this happened. Said Iacocca, ever the cheerleader and salesman: "They have a good management team, great looking cars, and good quality cars improving all the time."

I noted that the stock of Chrysler's parent company, DaimlerChrysler
DCX
has essentially gone nowhere in the past year or so, and asked if Iacocca expected it to do better in the next year.

He replied "Well, I would hope so. They've sort of been barreling along at $40 to $42. I would think it's under-priced and there's lots of value in some of the [auto] stocks. Like Ford, my old alma mater. Whe the stock went to $8, I started to buy some." [It closed today at $10.93].

And, I asked, how big a share of the U.S. car market will the new hybrid cars take?

He said, "If you're going to get any real improvement in fuel economy, which I think is key today, you've got to do it with hybrids. But they're expensive and complicated, though they do give you the fuel economy. They've got to get going with it in Detroit. Toyota and Honda have started, and they keep adding new models every day. GM, Ford and Chrysler have got to get with it and get some good hybrids."

I asked if DaimlerChrysler will cut its work force this year. He said he had no way of knowing, but "To stay competitive, everybody has to restructure."

How does Lee Iacocca spend his time these days?

He says he's working full time on diabetes through the foundation he created in the name of his late wife, Mary, who died of the disease.

"Don't forget to give me a plug for Joinleenow.org. I've already raised a couple million dollars. This is strictly diabetes research."

He's now working on his compensation for returning to be Chrysler's pitchman. A good part of it-maybe all-will go to his foundation. "It could be a buck a car or two bucks a car. I don't know how many millions I'll get."

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